REG - Petra Diamonds Ltd - Q1 FY 2024 Operating Update

Petra DiamondsAnnouncement

24/10/2023 07:00

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RNS Number : 0202R  Petra Diamonds Limited  24 October 2023

 

 

 24 October 2023   LSE: PDL

 

 

Petra Diamonds Limited

("Petra" or "the Company")

 

Q1 FY 2024 Operating Update

 

Petra reports improved diamond production in the first quarter of FY 2024

 

Richard Duffy, Chief Executive Officer of Petra, commented:

 

"With stabilising operations at Cullinan Mine and Finsch, and Williamson
resuming production ahead of schedule, production increased 12% from the
previous quarter. This was accompanied by a continuation of our strong safety
performance from Q4 FY 2023 following our renewed safety focus.

 

We believe the actions taken by the major producers to curb supply and the
two-month Indian diamond import moratorium will assist in stabilising the
market and supporting prices as inventory levels reduce. Whilst we continue to
see support for the market in the medium to longer term as a result of the
structural supply deficit, we are taking prudent steps to enhance our business
resilience in light of these market challenges and uncertainties that are
expected to continue over the coming months. By bringing forward our second
tender of FY 2024 we were able to sell 75% of our goods ahead of the
moratorium, with the balance sold shortly after. We are in discussions with
our first lien lender to upsize our existing Revolving Credit Facility and are
evaluating options to provide further financial flexibility, such as
optimising our operational expenditure and deferring capital spend.

 

We are confident these actions will enable us to navigate this period of
market weakness whilst limiting the impact on our value-led growth strategy."

 

Highlights vs Q4 FY 2023

 

·    We maintained our improved safety performance with LTIs and LTIFR
remaining at 2 and 0.12, respectively.

·    Total diamond production increased 12% to 696,639 carats mainly due
to Williamson successfully resuming operations ahead of schedule. Production
at Cullinan Mine was largely in line with expectations, with a small increase
in tonnes treated offset by grade trending towards the lower end of
expectations. At Finsch, tonnes treated decreased 23% from the preceding
quarter, largely offset by a 26% increase in ROM grade, reflecting increased
quarter-on-quarter volatility associated with the sub-level cave maturity.
Production guidance for FY 2024 remains unchanged.

·    Revenue totalled US$97.6 million, which included Tender 1 sales of
US$79.3 million and a portion of Tender 2 sales concluded prior to 30
September, with the balance of Tender 2 adding a further US$22.2 million post
period end.

·    Unrestricted cash balances amounted to US$56.5 million (30 June 2023:
US$44.1 million), with a further US$33.0 million (30 June 2023: US$8.9
million) cash received from diamond debtors shortly after period end. Cash
balances include a ZAR850 million (US$45.0 million) drawdown from the
Company's ZAR1 billion (US$53.0 million) Revolving Credit Facility.

 

·    Consolidated net debt increased to US$192.4 million (30 June 2023:
US$176.8 million) due to the timing of closing the Company's sales tenders,
the continued lower diamond pricing environment, working capital funding for
the resumption of mining at Williamson and the increasing capex spend profile,
as previously announced, to extend the life of our operations at Cullinan Mine
and Finsch.

 

Operating Summary

                                          Unit    FY 2024  FY 2023
                                          Q1               Q4       Var.  Q1       Var.  12 months
 Safety
 LTIFR                                    Rate    0.12     0.12     -     0.16     -25%  0.24
 LTIs                                     Number  2        2        -     3        -33%  17

 Sales
 Diamonds sold                            Carats  932,431  561,624  +66%  516,308  +81%  2,329,799
 Revenue(1)                               US$m    97.6     49.9     +96%  101.4    -4%   323.9
 Contribution from Exceptional Stones(2)  US$m    0.0      0.0      -     0.0      -     0.0

 Production
 ROM tonnes                               Mt      2.7      1.8      +49%  3.0      -9%   8.6
 Tailings and other tonnes                Mt      0.1      0.1      -     0.1      -     0.4
 Total tonnes treated                     Mt      2.8      1.9      +46%  3.1      -9%   9.0

 ROM diamonds                             Carats  652,021  592,374  +10%  729,761  -11%  2,517,309
 Tailings and other diamonds              Carats  44,618   27,644   +61%  29,951   +49%  149,216
 Total diamonds                           Carats  696,639  620,018  +12%  759,712  -8%   2,666,525

(1) Revenue reflects proceeds from the sale of rough diamonds and excludes
revenue from profit share arrangements

(2) Petra classifies "Exceptional Stones" as rough diamonds which sell for
US$15 million or more each

 

 

INVESTOR WEBCASTS

Webcast presentation for institutional investors and analysts at 09:30am BST
today

Petra's CEO, Richard Duffy, and CFO, Jacques Breytenbach, will host a live
webcast including Q&A for institutional investors and analysts today at
09:30 BST to discuss this operating update.

Webcast link for live presentation: https://brrmedia.news/PDL_Q1FY24
(https://brrmedia.news/PDL_Q1FY24)

Dial in details:

 

United Kingdom                033 0551 0200

South Africa                      0800 980 512

United States (Local)        +1 786 697 3501

 

Password (if prompted): Quote "Petra Diamonds Q1 Operations Update"

 

Link for recording (available later in the day):

https://www.petradiamonds.com/investors/results-reports/
(https://www.petradiamonds.com/investors/results-reports/)

 

Investor Meet Company webcast at 14.30pm BST today

 

Petra's CEO, Richard Duffy, and CFO, Jacques Breytenbach, will also present
these results live on the Investor Meet Company platform, predominantly aimed
at retail investors. To join:
https://www.investormeetcompany.com/petra-diamonds-limited/register-investor
(https://www.investormeetcompany.com/petra-diamonds-limited/register-investor)

 

 

FURTHER INFORMATION

 

Please contact

 

Investor Relations, London

Patrick Pittaway
 
Telephone: +44 20 7494 8203

Julia
Stone
investorrelations@petradiamonds.com
(mailto:investorrelations@petradiamonds.com)

Kelsey Traynor

 

Financial PR (Camarco)

Gordon
Poole
Telephone: +44 20 3757 4980

Owen
Roberts
petradiamonds@camarco.co.uk (mailto:petradiamonds@camarco.co.uk)

Elfie Kent

 

 

Notes:

1.     The following definitions have been used in this announcement:

a.     cpht: carats per hundred tonnes

b.     LTIs: lost time injuries

c.     LTIFR: lost time injury frequency rate, calculated as the number of
LTIs multiplied by 200,000 and divided by the number of hours worked

d.     FY: financial year ending 30 June

e.     CY: calendar year ending 31 December

f.      Q: quarter of the financial year

g.     ROM: run-of-mine (i.e. production from the primary orebody)

h.     m: million

i.      Mt: million tonnes

j.      period: the first quarter of FY 2024

 

ABOUT PETRA DIAMONDS

 

Petra Diamonds is a leading independent diamond mining group and a supplier of
gem quality rough diamonds to the international market. The Company's
portfolio incorporates interests in three underground mines in South Africa
(Cullinan Mine, Finsch and Koffiefontein) and one open pit mine in Tanzania
(Williamson). The Koffiefontein mine is currently on care and maintenance in
preparation for closure.

 

Petra's strategy is to focus on value rather than volume production by
optimising recoveries from its high-quality asset base in order to maximise
their efficiency and profitability. The Group has a significant resource base
which supports the potential for long-life operations.

 

Petra strives to conduct all operations according to the highest ethical
standards and only operates in countries which are members of the Kimberley
Process. The Company aims to generate tangible value for each of its
stakeholders, thereby contributing to the socio-economic development of its
host countries and supporting long-term sustainable operations to the benefit
of its employees, partners and communities.

 

Petra is quoted with a premium listing on the Main Market of the London Stock
Exchange under the ticker 'PDL'. The Company's loan notes due in 2026 are
listed on the Irish Stock Exchange and admitted to trading on the Global
Exchange Market. For more information, visit www.petradiamonds.com.

 

 

 

Corporate and financial summary 30 September 2023

 

                                                  Unit     As at 30 September  As at 30 June  As at 31 December  As at 30 September

                                                           2023                2023           2022               2022
 Cash at bank - (including restricted amounts)¹   US$m     74.3                61.8           146.6              154.0
 Diamond debtors                                  US$m     33.0                8.9            4.3                4.2
 Diamond inventories(2,3,4)                       US$m     51.8                65.9           59.9               76.3

                                                  Carats   479,430             715,222        540,153            692,219
 2026 US$336.7m loan notes(4)                     US$m     254.6               247.5          241.7              235.8
 Bank loans and borrowings(5)                     US$m     45.0                -              -                  -
 Consolidated Net Debt(6)                         US$m     192.4               176.8          90.8               77.6
 Bank facilities undrawn and available(5)         US$m     7.9                 53.1           58.8               55.1

Note:  The following exchange rates have been used for this announcement:
average for 3M FY 2024 US$1: ZAR18.65 (FY 2023: US$1: ZAR17.77); closing rate
as at 30 September 2023 US$1: ZAR18.92 (30 June 2023: ZAR18.83, 31 December
2022: US$1: ZAR17.00, and September 2022: ZAR18.15).

 

Notes:

1.     The Group's cash balances comprise unrestricted balances of US$56.5
million (30 June 2023: US$44.1 million), and restricted balances of US$17.8
million (30 June 2023: US$17.0 million).

2.     Recorded at the lower of cost and net realisable value.

3.     Diamond inventories for periods prior to 30 June 2023 include the
71,654.45 carat Williamson parcel of diamonds blocked for export during August
2017, with a carrying value of US$12.5 million. Under the Framework Agreement
entered into with the Government of Tanzania (GoT) in December 2021, it is
stated that the proceeds from the sale of this parcel are to be applied to the
Williamson mine to assist with the restart of operations and that in the event
such proceeds are not received by Williamson, Williamson is not required to
pay a US$20 million liability relating to the settlement of past tax disputes.
During earlier discussions, the GoT confirmed that the blocked parcel was
partially sold during FY 2023 and so this parcel was excluded from diamond
inventories in the Group's FY 2023 accounts and expensed to other direct
mining expense with the calculated fair value proceeds of US$12.4 million for
the blocked parcel recognised as other direct mining income and trade and
other receivables as at 30 June 2023. During these discussions, the parties
also confirmed their intent to resolve the treatment of the blocked parcel
sale proceeds and the related US$20 million settlement liability.

4.     Post period-end, the Company completed Tender 2 with the sale of
207,792 carats from Cullinan Mine and Finsch, yielding US$22.2 million.

5.     The 2026 US$336.7 million loan notes, originally issued following
the capital restructuring (the "Restructuring") completed during March 2021,
have a carrying value of US$254.6 million which represents the outstanding
principal amount of US$209.7 million (after the debt tender offers as
announced in September and October 2022) plus US$54.4 million of accrued
interest and is stated net of unamortised transaction costs capitalised of
US$9.5 million.

6.     Bank loans and borrowings represent the Group's ZAR1 billion
revolving credit facility (RCF). During Q1 FY 2024, as a result of the
deferment of the June 2023 diamond tender, the Group drew down ZAR850 million
(US$44.9 million) on the RCF.

7.     Consolidated Net Debt is bank loans and borrowings plus loan notes,
less cash and diamond debtors.

 

 

Mine-by-mine tables:

 

 

Cullinan Mine - South Africa

                                  FY 2024    FY 2023

                          Unit
                          Q1                 Q4         Var.  Q1         Var.  12 months
 Sales
 Revenue                  US$m    51.1       30.9       +65%  56.9       -10%  181,5
 Diamonds sold            Carats  519,362    327,429    +59%  267,728    +94%  1,306,457
 Average price per carat  US$     98         94         +4%   212        -54%  139

 ROM Production
 Tonnes treated           Tonnes  1,137,436  1,120,346  +2%   1,110,912  +2%   4,376,595
 Diamonds produced        Carats  318,261    323,535    -2%   368,796    -14%  1,343,191
 Grade(1)                 Cpht    28.0       28.9       -3%   33.2       -16%  30.7

 Tailings Production
 Tonnes treated           Tonnes  91,008     102,193    -11%  77,572     +17%  352,375
 Diamonds produced        Carats  44,618     27,644     +61%  26,790     +67%  142,654
 Grade(1)                 Cpht    49.0       27.1       +81%  34.5       +42%  40.5

 Total Production
 Tonnes treated           Tonnes  1,228,443  1,222,539  +0    1,188,484  +3%   4,728,970
 Diamonds produced        Carats  362,879    351,179    +3%   395,586    -8%   1,485,846

Note: 1. Petra is not able to precisely measure the ROM / tailings grade split
because ore from both sources is processed through the same plant; the Company
therefore back-calculates the grade with reference to resource grades.

 

 

Finsch - South Africa

                                  FY 2024  FY 2023

                          Unit
                          Q1               Q4       Var.   Q1       Var.   12 months
 Sales
 Revenue                  US$m    38.9     19.0     +105%  23.4     +66%   93.4
 Diamonds sold            Carats  375,214  234,195  +60%   177,285  +112%  848,236
 Average price per carat  US$     104      81       +28%   132      -22%   110

 ROM Production
 Tonnes treated           Tonnes  544,140  706,497  -23%   572,976  -5%    2,431,261
 Diamonds produced        Carats  259,864  268,839  -3%    260,217  -0%    1,033,602
 Grade(1)                 Cpht    47.8     38.1     +26%   45.4     +5%    42.5

 Tailings Production
 Tonnes treated           Tonnes  -        -        -      17,305   -100%  47,502
 Diamonds produced        Carats  -        -        -      3,160    -100%  6,562
 Grade(1)                 Cpht    -        -        -      18.3     -100%  13.8

 Total Production
 Tonnes treated           Tonnes  544,140  706,497  -23%   590,281  -8%    2,478,764
 Diamonds produced        Carats  259,864  268,839  -3%    263,377  -1%    1,040,164

Note: 1. Petra is not able to precisely measure the ROM / tailings grade split
because ore from both sources is processed through the same plant; the Company
therefore back-calculates the grade with reference to resource grades.

 

 

 

Williamson - Tanzania

                                  FY 2024    FY 2023

                          Unit
                          Q1                 Q4  Var.   Q1         Var.  12 months
 Sales
 Revenue                  US$m    7.7        -   +100%  21.1       -64%  49.1
 Diamonds sold            Carats  37,856     -   +100%  71,295     -47%  175,124
 Average price per carat  US$     203        -   +100%  297        -32%  280

 ROM Production
 Tonnes treated           Tonnes  1,035,911  -   +100%  1,309,359  -21%  1,829,376
 Diamonds produced        Carats  73,896     -   +100%  100,750    -27%  140,516
 Grade(1)                 Cpht    7.1        -   +100%  7.7        -7%   7.7

 Total Production
 Tonnes treated           Tonnes  1,035,911  -   +100%  1,309,359  -21%  1,829,376
 Diamonds produced        Carats  73,896     -   +100%  100,750    -27%  140,516

 

 

 

Capital expenditure breakdown

 US$m           Q1 FY 2024                          FY 2023

                Extension  Stay-in-Business  Total  Total
 Cullinan Mine  13.1       2.4               15.5   52.8
 Finsch         7.1        2.7               9.8    43.2
 Williamson     -          4.7               4.7    19.3
 Total          20.2       9.8               30.0   115.3

 

 

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